If you’re an owner of one of the 30.2 million small businesses in America, you need to know how to keep your books. No matter how great your products and services are and how well you take care of your customers, if you don’t know how to take care of the books, you could get in trouble.
You could get in trouble with the IRS, but your business could also be in danger of going under because of errors and miscalculations. Continue reading this article and we will give you bookkeeping tips to make sure you’re staying on track.
Always Separate Business & Personal Banking
If you keep your business and personal banking together, this can be confusing to you, the IRS, and people that you want to get a loan from. If you keep both things together, you’ll spend more time trying to figure out which expenses are which instead of just knowing the business account is for business expenses and the personal account is for personal expenses.
When you open a new business banking account, make sure it has online access, so you can easily monitor what is going on in your account.
Rather than keeping your accounts together, do transfers to your personal account as needed. It makes it easier if you plan scheduled transactions from your business to your personal account.
Choose to Go Solo or to Outsource
If you’re strong with numbers, you might feel confident enough to take on the task by yourself. On the other hand, if you find numbers confusing and frustrating, you might consider looking for online bookkeeping services that will take care of things for you.
If you want to do things on your own, you should look into bookkeeping software. Bookkeeping software will make it easy for you to categorize, search, and understand your data.
As you’re looking for a good software, you’ll see there are a lot of options, but make sure you choose one that has all the features you need without costly extras you don’t find necessary.
Get a Solid Business Documentation Strategy Underway
Do you find yourself shuffling to find your business documentation at the end of the year? Keeping a shoebox of receipts isn’t a good strategy if you want to be prepared in case of an audit.
You want to keep important documents anywhere from 5 to 7 years depending on the type of business you run and local requirements. The things you should keep are receipts, records from wages, invoices, and anything else that proves that money changed hands.
Set up a filing and archive system that is easy for you to remember and easy for you to pull documents from. You can choose to do everything offline, online, or do the safest thing — have both.
Don’t take cash and spend it. You always have to track cash by paying it into the business bank account or petty cash account. If you don’t do this, you’re going to mess with your bookkeeping system since saying you had a certain amount of cash isn’t exactly proof.
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Produce Monthly Reports
Don’t let things build up over time. It is important that you keep your records up to date by producing monthly reports.
You need to know how much income is coming in and how much money you have left. Many businesses find themselves lost and confused at how they got to where they are because they don’t take the time to look at their progress or lack thereof each month.
Invoice in a Timely Manner
When you do a job for someone or sell them something, invoicing them in a timely manner will help ensure you get paid. If you wait a long time to send an invoice, it isn’t unlikely that people are going to forget about who you are and why you want money from them.
Waiting a long time to invoice can hurt your cash flow and cause problems in your business. Make it a point to have a low maximum for the time that passes between when you sell a product or render a service.
Automate Whenever Possible
There are so many ways technology has made our lives easier and one of those is the ability to automate bookkeeping tasks. You can now sync your banking and your bookkeeping software online, so you don’t have to manually enter every transaction that takes place.
You can also automate paying bills, so you never have to worry if the lights will stay on because you know it’s taken care of. You’d be surprised how many business owners forget to pay their electric bill and end up waiting in the dark for their lights to come back on.
Use Time Tracking Software for Employees
You can use time tracking software that makes it easy for employees to clock in and clock out using their devices. There’s no more need to stamp ink to the paper using a time clock and time card.
Your employees will love the ease of use, but it will also make bookkeeping easier. You’ll be able to track hours worked, paid time off, and anything else that has to do with time tracking for your employees and you’ll be able to see it in the cloud.
Using the Best Bookkeeping Tips to Succeed
Now you know more about bookkeeping and when you use these bookkeeping tips, you’ll be able to stay on track. Keep building on this information and your business can keep functioning for many years to come.
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